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Access to Finance

26 September 2017

Access to finance for small and medium-sized enterprises (SMEs) in Northern Ireland

In Northern Ireland, small and medium-sized enterprises (SMEs) provide approximately three-quarters of all private sector jobs and turnover. Access to appropriate sources of finance is important in helping SMEs to develop and grow.

This report focuses on the progress made by Invest NI in implementing its `Access to Finance Strategy’. The strategy comprises seven funds which are mainly making investments and loans to local SMEs. The funds, which commenced in 2009, are managed by independent fund managers, and will provide total support of £181 million up to 2024 (£104 million from Invest NI and £77 million from private investors).

As well as assessing the extent of demand for finance from local SMEs, and whether this is being adequately met, the report highlights:

the importance of Invest NI minimising fund manager fees, and ensuring that fund managers deliver high standards of service.

a lengthy legal dispute between Invest NI and the fund manager for one of the strategy’s earliest funds, which was settled through a mutual agreement under which the fund manager voluntarily resigned, but in which Invest NI bore significant costs;

how Invest NI may incur significant financial losses in a number of funds because it has subordinated its funding in order to lever private investment – these arrangements mean that private investors are repaid their investment and receive an annual return before Invest NI recoups any of its investment; and

how Invest NI must gather clear and transparent evidence to show that the funds are helping SMEs grow and achieve increases in employment and other economic benefits.

To read the Full Report, Executive Summary or Media Release please follow the links.